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Oil Surges past $50 a Barrel First Time This Year

The price of oil surged past $50 per barrel on Thursday at 12:39 GMT for the first time since November. During Thursday’s trading session, US crude traded $0.47 higher at $50.03, and reached as high as $50.21 a barrel.

Later in the day, oil lost most of its gains and dipped back under $50 a barrel to $49.41 at 17:03 GMT.

In Europe, Brent crude also surpassed the $50 threshold, before declining to $49.66 at 15:36 GMT.

Oil prices have been steadily climbing since they reached a 14-year low of about $26 a barrel in February.

The increase in US crude came as a Bloomberg survey confirmed a larger-than-expected decline in gasoline and distillate fuel stockpiles. Surplus accumulation has slowed in recent months with supplies seen at less than two million barrels as of last week.

As much as four million barrels a day worth of production has been eliminated. There have been various production outages in Alberta, Libya, Nigeria, and Venezuela in the last several weeks, which are affecting the price of black gold.

Organization of the Petroleum Exporting Countries (OPEC) is scheduled to meet on June 2 to talk about a potential cut in oil production. The important $50 level could discourage OPEC officials from turning off the taps, observers say. In April, Saudi Arabia has produced 10.26 million barrels a day, which is close to a record-high. Despite low oil prices, Saudi Arabia has maintained steady output levels.

Investors may be concerned about a potential showdown between Saudi Arabia and Iran as the two oil-rich nations fight for market share.

“The bigger risk is that following the meeting, (the) Saudis will increase production to meet rising summer domestic demand, to preserve market share in its oil wars with Iran and Iraq,” David Hufton, head of PVM Oil brokers, told Reuters.

The gradual rise in oil prices could also prompt producers worldwide to start up operations once again.

Gasoline futures for June delivery edged higher by 0.5% to $1.65 a gallon, while June diesel jumped 0.8% to $1.488.

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